Industrial Hemp: Canada's Oldest New Industry

Takeaway:
The legalization of cannabis marks the beginning of a new chapter for the hemp industry.

Cannabis - it’s a misunderstood plant with a lot of potential and, although the varieties that get the most attention are those used as a drug, it’s the highly versatile industrial hemp that has producers, processors and manufacturers excited about the future.

“It’s not every day you can come along with a new crop,” says Russ Crawford, president of the Canadian Hemp Trade Alliance. “These things take so long, and yet these [plants] have been growing wild in the ditches of Canada for decades and now we’re harnessing that and putting it in the fields.”

Originally banned in the late 1930s, the practice of using hemp as a resource has been throttled due to red tape surrounding its sister plant, marijuana, and the presence of tetrahydrocannabinol (THC) (the psychoactive constituent of the plant) in its leaves and flowers.

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“There are over 100 different kinds of cannabinoids in the plant (cannabis) but the most widely known are THC and CBD (cannabidiol),” explains Crawford. “CBD is particularly high in hemp varieties where the THC content is low and, conversely, in marijuana varieties, the THC content is high and the CBD content is low.”

The Road to Legal Hemp Production in Canada

Although the levels of THC in hemp are minimal, 0.3 per cent or less, it remained illegal in Canada until 1994, when the federal government began conducting research to see if it could be successfully grown. Four years later (1998), as demand for use of the versatile plant continued to grow, and research demonstrated it was a safe and hardy crop, Health Canada began to issue permits for its cultivation and use in agricultural and industrial sectors.

Despite legalization, growers still faced tough regulations - including criminal background checks - as part of the application process, and testing of crops for THC levels no matter the use.

Now, with the passage of the Cannabis Act, which includes changes to the Industrial Hemp Regulations (IHR), farmers are looking forward to a more simplified process that will allow them to use all their crops.

“Honestly we got lucky with the legalization; that fast-tracked everything we were hoping to accomplish,” says Crawford. “I think we would have achieved whole plant use without that but this just makes it so much more prevalent in the public’s eye, and immediate in terms of how quickly things are going to evolve moving forward.”

While the new IHR will be fairly consistent with what’s in place now, some changes have been made to align licence requirements to the relatively low risk posed by industrial hemp, as well as the sale of whole hemp plants, including flowers, leaves and branches.

Hemp Production in Alberta

According to stats from Health Canada, almost 140,000 acres of industrial hemp were planted in 2017, an 80 per cent increase from 2016. The Prairies were home to a large majority of the land being used to grow hemp, with Saskatchewan producing more than 56,000 acres, followed by Alberta with almost 45,000 and Manitoba with 30,000.

“Alberta’s got a particularly good opportunity in terms of our climate zones and our irrigation structures,” says Crawford. “We’ve kind of got the best of both worlds here in Alberta with our geography.”

According to Crawford, varieties of hemp grown in southern Alberta on irrigation are best for food, due to moisture and organic production, while more northern parts of the province are well suited to grow hemp for fibre due to long daylight hours.

“We grow it every year but it is part of a rotation,” explains Keith Jones, General Manager and CFO of Rowland Farms, an organic producer located in southern Alberta. “We don’t grow hemp on the same land every year. In fact, we shoot for a one-in-four-year rotation for hemp. We grow wheat and other cereals. We also grow peas and corn. [Then] we grow flax seed as well as hemp seed.”

According to Jones, Rowland Farms has been growing hemp since it became legal for production in 1998. Describing the entrepreneurial spirit of owner Roy Brewin, he says the agribusiness has always had an interest in innovative crops and investing in ways to produce a quality product more efficiently.

“A lot of this has [already] been done with other crops, like flax and canola, but hemp is a different kind of crop,” says Jones, explaining the importance of education and research into the re-emerging plant. “It’s a very unique crop, it’s actually quite an easy crop to grow but a difficult [one] to harvest, so there’s a lot to learn about how to grow a hemp crop and how to harvest hemp crops on a broad acre scale.”

It’s expected that many farmers will look to take advantage of dual crop opportunities created through regulation changes allowing for whole plant use. Experts predict that producers would look to sell combinations of CBD and stalk or seed and stalk; however, they say there is limited opportunity for CBD and seed combos because of the way the plant matures.

Because hemp is a fast-growing and hardy plant, those working in agriculture know it will mean big things in the future as production techniques advance, but Jones says farmers need to do their due diligence before growing and not rely on a more open market.

“One thing that’s really key to [producing] hemp is to make sure you know who you’re going to be selling your crop to,” Jones said. “As with any specialty crop the markets are extremely variable and unpredictable. It’s not only that right now hemp is still relatively small acres in Canada it's also that if farmers grow it on speculation, it’s easy for them to overproduce based on what the market is ready to take.”

Processing Alberta Hemp

For farmers, the Alberta market is currently made up of roughly 115 permitted processing companies. Up until now, most of these facilities focused on seed collection, but with the changes in regulations and the ability to now use the whole plant, it is expected that processing facilities will increase in number as interest in the market continues to grow.

“What we’re finding is that not only is the hemp industry interested in capturing the cannabinoid values of the plant, but so are the marijuana companies who want to play in both sides in terms of THC and CBD,” Crawford said. “So what we’ve seen is some of these marijuana companies, like Canopy Growth and Aurora Cannabis, buying into hemp companies.”

Highlighting Aurora Cannabis’ recent move to become the majority shareholder in British Columbia-based Hempco Food and Fiber, Crawford says the CBD market is a very big part of the re-emerging hemp industry but hopes people will take the time to look at all the other possibilities hemp offers.

Fibre, for example, may be the least glamorous part of the hemp plant. For those who work within the industry, however, it can be one of the most attractive due to its versatility.

“I don’t think people realize the market potential of this product,” shares Dan Madlung, president and CEO of BioComposites Group, a Drayton Valley based manufacturer that makes fibre composite sheet products from hemp and other agricultural fibres. “The further I get into the industry the more I realize it’s a super strong fibre and it has so many attributes that you can design products that replace plastic and replace a lot of man-made products.”

Despite the possibilities Madlung knows are there, and his company's increasing need for hemp fibre, a lack of processing facilities focused on decortication, the process of separating fibre from the core of the plant, has forced the entrepreneur to import some of the material necessary to meet his needs.

According to Madlung, it isn’t only about the amount that’s available, but also the quality of the end fibre that needs to grow in Canada, something he believes is a huge opportunity, especially for rural areas of the province.

“The whole supply chain is a brand-new industry for Canada and Alberta,” he explains. “Just with what we can consume it’s a $200 million industry with 485 full-time rural jobs.”

“What we’re seeing on the supply chain is lots of hemp being grown, so there’s fibre, but then with decortication, there used to be no market for fibre,” Madlung continues. “But now that we’ve come on, and surpassed the [supply], it’s created quite a pull for those companies that want to decorticate and it’s created a market.”

Going into more detail about how far his company has come over the years, and where they plan to go, Madlung says he isn’t too worried about supply moving into the future as it’s normal for industries to experience growing pains as they develop.

Even so, Madlung believes it’s important for everyone to work together to help the industry along because, unlike other agricultural/industrial products of the past, hemp faces a lot more stigma.

“[Individuals] cannot build an industry. A new industry requires governments of all jurisdictions, counties, communities, provincial and federal,” he emphasizes. “It requires investors, and investors need to become more educated, so it also requires educational institutes. So, because it’s a new industry, we have to train people.”

The Future of Hemp in Alberta

Understanding that education is key and continued research is vital, municipalities across the province have been working independently and cooperatively to create progress for the hemp industry.

Brazeau County, a rural municipality in central Alberta of roughly 7,000 residents, has been working to educate farmers and businesses alike, while also working with organizations and educational institutes.

“It’s got an initial value right off the bat and it’s got a huge potential future,” says Brazeau County Reeve Bart Guyon. “If we get on top of it before the rest of the [world] we could have some leading-edge manufacturing and be ahead in how to grow it, harvest it and manage it.”

“It takes a few people to try it and it takes a lot of effort and a lot of knowledge for people to learn about something new,” shares Guyon. “It’s important because it gives [people] another choice and if the future unfolds like it seems to be predicting, hemp is going to be one of the solutions within the textile industry and that’s a massive global market.”

With hemp's ability to replace plastics, fabric and many other man-made products it’s easy to see that October 17th is only the beginning of a new chapter for this industry.

“We won’t know what the economics of this will be until the industry matures a little bit,” says Crawford. “We know what seed values are worth, and we know what fibre values are, but we have no idea where this cannabinoid market is going to settle out and how much content people are going to get in terms of yield from their plants. There’s a lot of unanswered questions and it will take several years to figure out.”

Lesley Allan is a freelance writer and content creator located in central Alberta. With an English degree and Journalism diploma, she has been working within communications and media for 10 years. Lesley’s work has also been featured in Canadian Biomass, and the Drayton Valley Western Review.

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